Section 1 Short title
This Act may be cited as the “American Research and Competitiveness Act of 2015”.
American Research and Competitiveness Act of 2015
AN ACT
To amend the Internal Revenue Code of 1986 to simplify and make permanent the research credit.
Sec. 2 Research credit simplified and made permanent
In general— Section 41(a) of the Internal Revenue Code of 1986 is amended to read as follows:
“(a) In general—For purposes of section 38, the research credit determined under this section for the taxable year shall be an amount equal to the sum of—
“(1) 20 percent of so much of the qualified research expenses for the taxable year as exceeds 50 percent of the average qualified research expenses for the 3 taxable years preceding the taxable year for which the credit is being determined,
“(2) 20 percent of so much of the basic research payments for the taxable year as exceeds 50 percent of the average basic research payments for the 3 taxable years preceding the taxable year for which the credit is being determined, plus
“(3) 20 percent of the amounts paid or incurred by the taxpayer in carrying on any trade or business of the taxpayer during the taxable year (including as contributions) to an energy research consortium for energy research.”
Repeal of termination— Section 41 of such Code is amended by striking subsection (h).
Credit allowed against alternative minimum tax in case of eligible small business— Section 38(c)(4)(B) of such Code is amended by redesignating clauses (ii) through (ix) as clauses (iii) through (x), respectively, and by inserting after clause (i) the following new clause:
“(ii) the credit determined under section 41 for the taxable year with respect to an eligible small business (as defined in paragraph (5)(C), after application of rules similar to the rules of paragraph (5)(D)),”
Conforming amendments—
Section 41(c) of such Code is amended to read as follows:
“(c) Determination of average research expenses for prior years
“(1) Special rule in case of no qualified research expenditures in any of 3 preceding taxable years—In any case in which the taxpayer has no qualified research expenses in any one of the 3 taxable years preceding the taxable year for which the credit is being determined, the amount determined under subsection (a)(1) for such taxable year shall be equal to 10 percent of the qualified research expenses for the taxable year.
“(2) Consistent treatment of expenses
“(A) In general—Notwithstanding whether the period for filing a claim for credit or refund has expired for any taxable year taken into account in determining the average qualified research expenses, or average basic research payments, taken into account under subsection (a), the qualified research expenses and basic research payments taken into account in determining such averages shall be determined on a basis consistent with the determination of qualified research expenses and basic research payments, respectively, for the credit year.
“(B) Prevention of distortions—The Secretary may prescribe regulations to prevent distortions in calculating a taxpayer’s qualified research expenses or basic research payments caused by a change in accounting methods used by such taxpayer between the current year and a year taken into account in determining the average qualified research expenses or average basic research payments taken into account under subsection (a).”
Section 41(e) of such Code is amended—
by striking all that precedes paragraph (6) and inserting the following:
“(e) Basic research payments—For purposes of this section—
“(1) In general—The term basic research payment means, with respect to any taxable year, any amount paid in cash during such taxable year by a corporation to any qualified organization for basic research but only if—
“(A) such payment is pursuant to a written agreement between such corporation and such qualified organization, and
“(B) such basic research is to be performed by such qualified organization.
“(2) Exception to requirement that research be performed by the organization—In the case of a qualified organization described in subparagraph (C) or (D) of paragraph (3), subparagraph (B) of paragraph (1) shall not apply.”
by redesignating paragraphs (6) and (7) as paragraphs (3) and (4), respectively, and
in paragraph (4), as so redesignated, by striking subparagraphs (B) and (C) and by redesignating subparagraphs (D) and (E) as subparagraphs (B) and (C), respectively.
Section 41(f)(3) of such Code is amended—
by striking “, and the gross receipts” in subparagraph (A)(i) and all that follows through “determined under clause (iii)”,
by striking clause (iii) of subparagraph (A) and redesignating clauses (iv), (v), and (vi), thereof, as clauses (iii), (iv), and (v), respectively,
by striking “and (iv)” each place it appears in subparagraph (A)(iv) (as so redesignated) and inserting “and (iii)”,
by striking subclause (IV) of subparagraph (A)(iv) (as so redesignated), by striking “, and” at the end of subparagraph (A)(iv)(III) (as so redesignated) and inserting a period, and by adding “and” at the end of subparagraph (A)(iv)(II) (as so redesignated),
by striking “(A)(vi)” in subparagraph (B) and inserting “(A)(v)”,
by striking “(A)(iv)(II)” in subparagraph (B)(i)(II) and inserting “(A)(iii)(II)”,
by striking “, and the gross receipts of the predecessor,” in subparagraph (A)(iv)(II) (as so redesignated),
by striking “, and the gross receipts of,” in subparagraph (B),
by striking “, or gross receipts of,” in subparagraph (B)(i)(I), and
by striking subparagraph (C) and inserting the following new subparagraph:
“(C) Adjustments for basic research payments—In the case of basic research payments, rules similar to the rules of subparagraph (A) and (B) shall apply.”
Section 41(f)(4) of such Code is amended by striking “and gross receipts” and inserting “and basic research payments”.
Section 45C(b)(1) of such Code is amended by striking subparagraph (D).
Section 45C(c)(2) of such Code is amended—
by striking “base period research expenses” and inserting “average qualified research expenses”, and
by striking “base period research expenses” in the heading and inserting “average qualified research expenses”.
Section 280C(c) of such Code is amended—
by striking “basic research expenses (as defined in section 41(e)(2))” in paragraph (1) and inserting “basic research payments (as defined in section 41(e)(1))”, and
by striking “basic research expenses” in paragraph (2)(B) and inserting “basic research payments”.
Effective date—
In general— Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after December 31, 2014.
Subsection (b)— The amendment made by subsection (b) shall apply to amounts paid or incurred after December 31, 2014.
Sec. 3 Budgetary effects
The budgetary effects of this Act shall not be entered on either PAYGO scorecard maintained pursuant to section 4(d) of the Statutory Pay-As-You-Go Act of 2010.